"Trying to be objective (and I'm long) it looks like dead money (except possibly for traders)"
I agree with your numbers, calculations and assumptions. I also think that earnings will be moving up and Intel will be breaking up, out of the price range. I like writing the put options after a drop and writing call options after a run up for an extra 10% to 15% annually. "Dead money" works very nicely for me.
"Objective" is the key word. If a stock doesn't meet your objectives, you should try to find something that better meets your criteria. "Dead money" is the phrase which makes me wonder if you really are long. Wouldn't it be wrong for someone to invest in a stock they view as "dead money"?
I thought the 4 14nm fabs were going to be new or expansions:
the new Fab42 in Chandler, AZ
the new D1X fab in Hillsboro, OR
expand Leixlip and Kiryat Gat fabs in Ireland and Israel.
Which were changed over?
The bulls were not jumping in because of the increased short interest. Intel was strong because of MSFT earnings reports were better than expected. The Intel short interest started in May 2012 when Intel high $29 and for the first 6 months following May 2012, short interest increased by 10m to 20m shares per month with only a slow down around the end of the years.
The Intel stock price has never seemed to even respond to the size of the short interest other than to attract the attention of the Seeking Alpha Kofi's for clicks to pay for their "mail drop" investment companies.
If the OMM has to pay 41 cents for an option that has an intrinsic value of 17 cents, then he has to make up for the 41 - 17 = 24 cent loss on the trade. How does he do that? 8-)
I have a VAGUE theory about dividend arbitraging that affects the trading price of Intel shares. I think they are using Intel options and the ex-dividend day discontinuity in option pricing to trim pennies. When the Intel trading price flat lines, there seems to be a large trading volume in an option series. Today they appear to be SELLING NOV 16th $24 CALL options. The volume is 19,000 contracts. When they sell that many CALL options, the option market maker has to step in to buy them. When the option market maker buys call options, he will HEDGE the possibility of getting some or all of those shares. The neutral position for the OMM is to SHORT INTC in preparation for potentially getting shares.
Google SYNTHETHIC SHORT OPTIONS and look for THEOPTIONGUIDE site for more info.
Just a THEORY of mine but it seems to correlate.
IMO, there is the routine dividend arbitrage trading that will exert pull toward $24. If INTC can break the STRIKE + DIVIDEND level with significant interest, then $24.50 is the next orbit. If not, INTC should finsh near $24.00. Ugh.
The extreme Covello outlier position is hard for my brain to comprehend. I cannot accept that he is right.
If he is not right, then it leaves me a couple of reasons for his actions:
he is depending on a model which happens to "correlate" but there is no "causation" and the model is invalid.
he is not smart.
he is taking his position knowing that it is wrong.
some or all of the above.
INTC will first have to get through $24.225 ($24 option strike + dividend).
INTC will have to then get through $24.275 ($24.50 option strike - dividend)
INTC will have to then get through $24.50 (option strike)
$24.725 ( $24.50 option strike + dividend)
and .... those with 255m shares short are not going to capitulate without a fight. Goldman Sachs is behind most of them with their $16 SELL price target. They have rather deep pockets.
A trade that large is an institutional trade and could be anything that two institutions or market makers could transact. MSFT announced earnings at 4:02 8-)
I think Intel made $452m on Clearwire. Do you know what their investment was or how much they actually got back from the purchase?
Sounds like you think that I was making a judgment of some sort. I was just reminding that there might be some significant logistical/financial decisions to putting the pile of cash to work.
"They can use that money overseas for other things and that frees up more available cash locally for Dividends"
True. They can upgrade Ireland and Israel and ... plants. US cash is building fabs in AZ and OR. Those are rather expensive. If a large % of cash is overseas, it might make Intel reluctant to raise dividends or buy back shares. I am waiting for the 3q 10q to be published.
Intel can probably borrow in the US against the cash asset in Europe, Japan and Israel cheaper than they can pay the taxes and bring the money back to the US. That might be the reason they have set the buy backs at $500m per quarter.
It can't be used without substantial penalty. You have to locate the cash. I would expect that like many other US companies, that the cash is deposited in foreign banks and cannot be repatriated without substantial US tax.
the ten US companies with the most cash sitting abroad: $Billion
"But I would sometimes spread misinformation. ... "Misinformation works."
I think that today there is a seam in their compute continuum where on the low end Apple uses their ARM devices and on the high end they use the Intel devices. The boundary of is currently between the iPad/MAC. I would expect some blurring of that boundary ... ARM desktops and x86 iPad devices. ARM desktops are probably more likely since they control both the SW and HW. If I were Apple, I would probably try to go ARM top to bottom .... if my customers would support that.
I would expect them to simply churn the boundary with new products and price new devices at the margins the components would support and let the market decide.
I doubt that they would ever convert 100% to either architure or at least not in this decade. JMO.
Perlmutter was not asked to leave but he was put into a position where he could chose what he wanted to do. BK reorganized the top and had the Intel Architecture Group (Perlmutter's group) report directly to him. Perlmutter was given a staff position until reassignment .... At 60 years old and a 65 year Intel retirement rule, Perlmutter had only 5 years left before being forced into retirement. He leaves in Feb on his 34th anniversary at Intel.
I agree about the changes and allowing some time for results.
I have been fairly successful at making the short term trades but when I have failed to take my earliy winnings, I get too greedy and don't do very well at all.
ARMH went on up another $1 in AH and the puts opened at $1.25 so I was down. They were sluggish to the up side and not very liquid. Maybe next time .... yep! thanks
Ex-dividend date 11/5/2013
You have to buy Intel shares on or before Monday 11/4
Declared Date 09/25/13
Record Date 11/07/2013
Payable Date 12/01/2013
It probably depends on her performance between now and the need for the next CEO.